Bell Telephone System

The regional Bell telephone companies are lobbying heavily for the right to compete with AT&T in manufacturing phone equipment, and supporters and opponents say the Senate appears ready to go along. The seven Baby Bells argue that letting them join the telecommunications manufacturing market would increase competition and create new jobs for American workers. But American Telephone & Telegraph Co. insists that the eventual effect would be to drive up local phone prices.

Three weeks after winning unusually swift approval of stopgap telephone competition rules, Federal Communications Commission Chairman Michael K. Powell is under pressure to change key elements in an effort to help the companies that compete with the Baby Bells. The temporary rules -- which haven't yet gone into effect -- would govern the extent to which the Bells must share their equipment with rivals.

Ending years of delay and deadlock, the House on Tuesday adopted landmark legislation that rewrites the rules governing the communications industry, paving the way for an era of reduced regulation and increased competition among telephone companies and cable television operators. Lawmakers from across the ideological spectrum joined in support of two companion bills that represent the most fundamental change in federal rules for communications firms since the depths of the Great Depression.

AT&T Corp., MCI Inc. and other telephone carriers lost a Supreme Court bid Monday to keep in place regulations that have helped foster competition and saved customers $16 billion a year. Chief Justice William H. Rehnquist denied the companies' emergency request to maintain the federal rules while the high court decides whether to review a lower court decision that threw them out.

Increasingly at odds over how best to capitalize on the booming telecommunications market, the seven regional Bell operating companies are considering spinning off their powerful jointly owned research arm. The 10-member board of Bell Communications Research, better known as Bellcore, has discussed selling the nation's largest research consortium in a public stock offering or letting private investors buy a stake, according to company and industry sources.

The seven regional Baby Bell telephone companies, increasingly divided over how best to capitalize on the booming telecommunications market, announced Thursday that they will put their powerful jointly owned research arm up for sale. The long-rumored move to sell Bellcore--which holds 439 U.S. patents, has a work force of 6,000 and generates about $1 billion in annual sales--comes after months of fractious infighting over how and when to put the Livingston, N.J.-based unit on the market.

Legislation to block the seven regional Bell telephone companies from immediately using their phone lines to offer electronic information services was introduced in the House on Tuesday. Introduction of the Telecommunications Act of 1991 came a day after the U.S. Court of Appeals freed the Bell companies from restrictions on their ability to offer information services. The bill had been sought by the American Newspaper Publishers Assn.

A federal appeals court in Washington agreed that a 1996 law barred regional Bell companies such as Chicago-based Ameritech Corp. and Denver-based US West from selling long-distance service from Qwest Communications International Inc., also based in Denver. The ruling, upholding a decision by the Federal Communications Commission, was a victory for AT&T Corp.

Handing local phone giants another defeat in their quest for quick entry into the $70-billion long-distance market, the Supreme Court on Tuesday refused to review a federal law that prevents the regional Bell phone companies from offering long-distance service. Without comment, the high court rejected appeals by Bell Atlantic Corp., SBC Communications Inc. and US West Inc.

Former regional Baby Bell phone companies got a cool reception Wednesday as they renewed their assault on a 1996 law they say makes it harder to compete with cable operators in offering high-speed Internet service. The telephone giants, such as SBC Communications Inc. and Verizon Communications Inc.

The head of the Federal Communications Commission said Thursday that the agency would write new regulations on the leasing of local telephone networks, now that the Bush administration has decided not to appeal a ruling overturning competition rules. FCC Chairman Michael K. Powell said that revising the rules was at the top of his agenda. The rules, thrown out by an appeals court in March, have saved customers $16 billion a year by forcing SBC Communications Inc.

The Bush administration and federal regulators sided with the Baby Bell companies Wednesday and refused to seek Supreme Court review of telephone competition rules. AT&T Corp. and MCI Inc. said they still planned to appeal the court decision that threw out rules requiring the Bells to lease their local phone lines and gear to competitors at regulated wholesale rates.

A federal court ruling Friday has put the White House in an election-year quandary: Should it back big local phone companies in their drive to undo regulations or side with consumer groups by supporting a plan they say will bring more choices and lower prices? The Bush administration had hoped the U.S. Circuit Court of Appeals in Washington would head off such a dilemma by agreeing to give SBC Communications Inc., Verizon Communications Inc.

Federal Communications Commission Chairman Michael K. Powell ordered the nation's four Baby Bells and their biggest rivals to spend the Memorial Day weekend negotiating agreements to lease Bell networks and gear. Upset with a stalemate over the last two months, Powell and Commissioner Kevin J. Martin are overseeing talks aimed at settling a decade of animosity and botched federal rules over competition and wholesale rates, say sources inside and outside the FCC.

Federal regulators and the Bush administration are increasingly skeptical that negotiations between Baby Bell phone companies and their competitors over access to local networks will succeed. But the Federal Communications Commission and the White House appear to be at odds over how to bring the two sides together before June 15, when a federal appeals court lifts a stay on a ruling that tosses out existing phone competition rules.

The Baby Bell companies that control the nation's local telephone networks apparently like to keep their friends close -- and their enemies closer. Reversing their long-held disdain for the competitors that lease Bell networks and equipment to provide local phone service, some of the Bells now want to bind rivals to those facilities and prevent them from installing their own gear. The apparent about-face is infuriating regulators, people familiar with the situation said Thursday.

The head of the Federal Communications Commission said Tuesday that the agency plans to offer rivals of the regional Bell phone companies new incentives to encourage them to build competing networks. In his second news briefing since taking office in January, FCC Chairman Michael K. Powell also said it is unlikely his agency will reach a quick settlement with bankrupt wireless phone carrier NextWave Telecom Inc., which now controls $16.

The head of the Federal Communications Commission has asked Congress for more authority to investigate and punish regional Bell companies that stymie federal efforts to promote phone competition. In his first major legislative initiative since becoming FCC chairman in January, Michael K. Powell sent a letter Friday to the Senate and House commerce and appropriations committees seeking to boost the FCC's current maximum $1.2-million fine to $10 million per incident.

SBC Communications Inc. and other Baby Bells are lobbying federal regulators for permission to keep secret the deals they reach with rivals to share their local telephone networks. Representatives from SBC and other Bell companies late this week sought help from Chairman Michael K. Powell of the Federal Communications Commission in preventing state utility commissioners from reviewing and approving the deals.

SBC Communications Inc. on Friday rebuffed an order from California regulators to disclose a leasing contract it recently negotiated with a small competitor, setting up a showdown over whether regional Bell phone companies must publicly divulge the deals they are making with rivals. SBC and Sage Telecom Inc.